NEW YORK -- Regulators duplicating the efforts of their peers at other agencies is a risk looming on the horizon, says Richard Ketchum, CEO of FINRA.
Ketchum, speaking at a joint SIFMA and American Institute of CPAs conference, says coordination between regulators is "an absolutely critical thing."
"The firms you represent today live in an exceptionally crowded environment form a regulatory standpoint," Ketchum told attendees.
Regulations have increased since the financial crisis. Firms operating in multiple financial sectors face multiple regulators, sometimes with oversight of nearly identical operations.
Ketchum says FINRA regularly shares information and concerns with its international and domestic peers, particularly the SEC.
"We try to make sure that if we are looking at the same problem that we are at least looking at different aspects of the problem," he says.
However, there is more room for improvement, Ketchum says, adding that he hopes to improve regulatory coordination next year.
"Where you see instances of duplication or have concern about overlap, we would love to hear from you," he says. "This is not a simple effort for any of us."
Ketchum also says that the ability to gather and analyze data is fast changing how FINRA and other agencies regulate the financial services industry.
"How we get there in the next five years will remain an interesting debate, but there's no doubt in my mind that the use of big data is different from what it was five years and will be different five years from now," he says. "There is no doubt in mind that regulators will be defined by their use of big data."
Earlier this year, FINRA put the brakes on creating a centralized database of client transactions called CARDS, which was widely criticized by firms as being an example of overreach. Critics also charged that such a database would be at risk of being hacked due to the sensitive information collected there.
"CARDS was an area where we are stepping back with respect to the meaningful risks involved with respect to a centralized database," Ketchum says. "But the central purpose behind cards isn't going way."
Ketchum says that FINRA will continue to look at ways to develop more targeted exams of firms.
"If we can't do it from a centralized database then we need to do it on a sweep basis, on a situation by situation basis," he says.
Ketchum reminded his audience that part of FINRA's mission is to understand the pressure points within the business
- SEC OKs FINRA BrokerCheck Link Rule
- UBS to Pay SEC $19.5M for Claims It Mislead Clients
- RIA Industry Still Fearful of FINRA Incursion